Economy Watch: Existing Home Sales Drop
- Dec 23, 2014
The National Association of Realtors reported on Monday that total existing-home sales fell in November by 6.1 percent compared with October to an annualized rate of 4.93 million units, and the October rate was itself revised downward to 5.25 million units. Sales dropped to their lowest annualized pace since May (4.91 million) but are up 2.1 percent from last November.
Total housing inventory at the end of November fell 6.7 percent to 2.09 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace – unchanged from last month. Despite the tightening in supply, unsold inventory remains slightly higher than a year ago, when there were 2.05 million existing homes available for sale.
“Lagging homebuilding activity continues to hamstring overall housing supply and is still too low in relation to this year’s promising job growth,” NAR economist Lawrence Yun asserted in a statement. “Much faster price and rent appreciation – easily exceeding wage growth – will occur next year unless new construction picks up measurably.”
Chicago Fed National Activity Index Up
The Federal Reserve Bank of Chicago released its latest the Chicago Fed National Activity Index (CFNAI) on Monday, which recorded a strong improvement. Led by improvements in production-related indicators, the index rose to +0.73 in November from +0.31 in October. Two of the four broad categories of indicators that make up the index increased from October, and only one of the four categories made a negative contribution to the index in November.
Production-related indicators came in at +0.64 for the month, while consumption and housing category was –0.10. On the other hand, employment-related indicators came in at +0.17, and the sales, orders, and inventories category was +0.02 in October. The four broad categories all together include a total of 85 separate economic indicators.
The index’s three-month moving average, CFNAI-MA3, rose to +0.48 in November from +0.09 in October, reaching its highest level since May 2010. November’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend, the Fed said.
Philly Fed’s Coincident Indexes Up As Well
The Federal Reserve Bank of Philadelphia reported on Monday that its coincident indexes increased in 44 states, decreased in two, and remained stable in four in November compared with October. Over the three months ending in November, the indexes increased in 48 states and decreased in two.
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment; average hours worked in manufacturing; the state unemployment rate; and wage and salary disbursements.
Wall Street surged upward again on Monday, with the Dow Jones Industrial Average gaining 154.64 points, or 0.87 percent, and nearly touching 18,000. The S&P 500 and the Nasdaq were up 0.38 percent and 0.34 percent, respectively.